hdfclife cg policy

8/13/2019 HDFCLife CG Policy

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HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

CORPORATE GOVERNANCE POLICY

Version 3

PART A

I) INTRODUCTIONThe Corporate Governance Policy provides the framework under which the

Board of Directors operates. It includes its corporate structure, culture, policies

and the manner in which it deals with various stakeholders. The governance

policies address the responsibilities, authority and administration of the Board of

Directors. The policies also include the responsibilities of the Principal Officer and

define the reporting relationships.

Timely and accurate disclosure of information regarding the financial situation,

performance, board constitution, ownership of the company etc. is an important

part of corporate governance. Corporate governance arrangements are those

through which an organization directs and controls itself and the people

associated with it.

The Policy is normally reviewed once in two years and modified when

appropriate to ensure proper alignment with best practices in corporate

governance.

II) COMPANYS PHILOSOPHY ON CORPORATE GOVERNANCECorporate Governance is a process that aims to meet stakeholdersaspirations

and societal expectations. It is not a discipline imposed by a Regulator, rather is a

culture that guides the Board, Management and Employees to function towards

best interest of Stakeholders.

At HDFCSL, Corporate Governance philosophy stems from the belief that

corporate governance is a key element in improving efficiency and growth as well

as enhancing investor confidence. Accordingly, the Corporate Governancephilosophy has been scripted as under: As a good corporate citizen, the

Company is committed to sound corporate practices based on its vision, values &


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Company), the Committees appointed by the Board focus on specific areas and

take informed decisions within the framework of delegated authority, and make

specific recommendations to the Board on matters within their areas of

purview. All decisions and recommendations of the Committees are placed

before the Board for information or for approval.

IV) COMMITTEES OF THE BOARD OF DIRECTORS Audit Committee of Directors

Remuneration Committee of Directors

Share Transfer and Allotment Committee.

Risk Management Committee of Directors

V) OTHER COMMITTEES

Investment Committee Policyholder Protection Committee

Nomination Committee

Executive Committee


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PART B

I) BOARD OF DIRECTORSThe Board is responsible to act in the best interests of the Company and itsshareholders. In discharging their duties the Directors shall comply with the

Code of Conduct as adopted by the Board.

Directors are expected to attend and actively participate in Board Meetings and

Meetings of Committees on which they serve and to spend the time needed and

meet as frequently as necessary to properly discharge their responsibilities.

The Board is responsible for overall compliance with the corporate governance

policy of the Company. It oversees and directs the management of the

Companys business and affairs. In doing so, it must act honestly, in good faith

and in the best interests of the Company.

A) Board CompositionAs per the Articles of Association of the Company, the maximum number of

Directors which the Company can appoint is 15 (excluding any alternate

directors). At any one time, upto 3 directors each shall be nominated by

HDFC and Standard Life. The Companys Board shall have an optimum

combination of Executive, Non-Executive and Independent Directors as

required by the IRDA Corporate Governance Guidelines

B)Board Responsibilities* -i) The Board should ensure that the Governance principles set for the

insurer comply with all relevant laws, regulations and other applicable

codes of conduct.

ii) The Board should set the following policies in consultation with the

Management of the Company as indicated.

a) Define and periodically review the corporate business policy.b) Define the underwriting policy of the insurer.

c) Determine the retention and reinsurance policy and in particular,

the levels of retentions of risk by the insurer and the nature and

extent of reinsurance protection to be maintained by the insurer.

d) Define the policy of the insurer in investment of its assets

consistent with an appropriate asset liability management

structure.

e) Define the insurers policy on appointments and qualification

requirements for staff at all levels and for fixing their remuneration

and benefits; the remuneration policy should not include incentivesthat encourage imprudent behaviour.

* Requirement of IRDA Corporate Governance Guidelines, 2009


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iii) The Board should define and set the following standards:-

a) Define the standards of business conduct and ethical behaviour

for directors and senior management.

b) Define the standards to be maintained in policyholder servicingand in redressal of grievances of policyholders.

iv) The Board would be responsible to provide strategic guidance for

implementation of business policy and structure a management

information system for review and course correction.

v) As an integral part of the proper implementation of the guidelines of

the business and other policies, the Board should take action as

under:-

a) Establish appropriate systems to regulate the risk appetite and

risk profile of the Company. It will also enable identification and

measurement of significant risks to which the company is

exposed in order to develop an effective risk management

system.

b) Ensure that all supervisory/regulatory directions are submitted to

the Board and the supervisors recommendations are utilized in

the assessment of the performance of the senior management in

implementation of Board philosophy.

c) Define the role of the Appointed Actuary and the degree of his

involvement in the designing and pricing of products and in

determination of liabilities.

d) Ensure that the Appointed Actuary has direct access to the Board

and reports on important matters to the Board in a timely

manner.

e) Ensure that the IT systems in the company are appropriate and

have built-in checks and balances to produce data with integrity.

f) Ensure that the company has in place a robust compliance system

for all applicable laws and regulations.

g) Prescribe the forms and frequency of reporting to the Board in

respect of each of the above areas of responsibility.

vi) In the discharge of the above and other Governance functions, the

Board should delegate the responsibilities to mandated/ other

recommended Empowered Committees of Directors while retaining

its primary accountability.

vii) The Board should ensure that the insurer is compliant with its

directions and all statutory provisions and regulations framed

thereunder through:

a) A sound system of internal controls and audit in respect of allaspects of the insurers activities and accounts, including financial,


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H) Information to be placed before the Board of DirectorsThe information to be placed before the Board of Directors shall include but

not be limited to the following:

(i)

Annual business plans and budgets and updates on the same everyquarter.

(ii)Capital budgets and any updates and periodic reviews of performance of

the Insurance Company.

(iii)Quarterly / Half yearly / Annual financial results, as the case may be, for

the company and its operating divisions or business segments.

(iv)Minutes of meetings of Audit Committee and other committees of the

Board.

(v) The information on recruitment and remuneration of senior management

personnel i.e. officers just below the Board level, including appointment

or removal of Chief Financial Officer and the Company Secretary /

Compliance Officer, HeadAudit & Risk.

(vi)Show cause, demand, prosecution notices and penalty notices which are

materially important.

(vii)Fatal or serious accidents, dangerous occurrences affecting business

continuity.

(viii)Any material default in financial obligations to and by the Company.

(ix) Any issue, which involves possible public or product liability claims of

substantial nature, including any judgment or order which, may have

passed strictures on the conduct of the Company or taken an adverse

view regarding another enterprise that can have negative implications on

the Company.

(x) Details of any joint venture or collaboration agreement.

(xi) Transactions that involve substantial payment towards goodwill, brand

equity or intellectual property.

(xii)Significant labour problems and their proposed solutions. Any significant

development in Human Resources front like change in compensation

structure, implementation of Voluntary Retirement Scheme etc.

(xiii)Sale of a material nature; e.g. investments, subsidiaries, assets, which is

not in normal course of business.

(xiv)Non-compliance of any regulatory, statutory nature or listing

requirements (when applicable) and shareholders service such as non-payment of dividend etc.

(xv)organizational structure of the Insurance Company and delegation of

authority,

(xvi)corporate and management controls and systems including procedures;

(xvii) economic features and marketing environment,

(xviii) information and updates as appropriate on Insurance Companys

products;

(xix) information and updates on major expenditure;

(xx) report periodically about implementation of strategic initiatives and

plans;(xxi)all relevant information for taking informed decisions in respect of

matters brought before the Board;


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(xxii) The reports of the Policyholders Protection Committee / minutes

thereof.

I) Agenda for the Board MeetingsThe agenda for the Board Meetings alongwith information relevant to theagenda shall be sent in writing or electronically to the Directors at least 5

working days prior to the Meeting. Each Board member is free to suggest the

inclusion of items on the agenda. With the permission of the Chair, each

Board member is also free to raise, at any Board Meeting, matters that are

not on the agenda. However, with reference to any sensitive matter on the

agenda, relevant information shall be made available only at the time of the

Board Meeting.

J) Attendance at Board MeetingsThe Board Meetings shall be attended by the Directors and on invitation of

the Board by executives of the Company who can provide an insight into the

agenda items being discussed. All the Executive as well as Non-Executive

Directors shall endeavour to attend all meetings of the Board. In case a

Director cannot attend a specific Board Meeting, he or she shall obtain leave

of absence from the Board.

K) Minutes of the Board MeetingThe minutes of all meetings of the Board shall be circulated as soon as

possible to the members of the Board from the date of the Board meeting to

the Directors and shall be approved in the next Board Meeting.

L) Duties and Responsibilities(i) The Board is responsible for Review of the Compliance Certificates along

with the Compliance Report of various laws, Regulations and applicable

codes submitted by concern Functional Heads on Quarterly basis.

(ii) Formulation, adoption and review of the various policies prescribed by

various Statutory Authorities from time to time.

(iii)Setting Standards of Business Conduct and Ethical Behavior for the Boardof Directors and Sr. Management.

(iv)Setting Standards of Servicing to Policy Holders and their grievance

redressal mechanism.

(v) Providing strategic guidance for implementation of business policy and

Structure for Management Information System for review and taking

corrective actions.

(vi)Reviewing and regulating the risk profile of the Company through the

effective Risk Management System.

(vii)Reviewing all the Regulatory and supervisory directions submitted to it

from time to time.(viii)Assessing the performance of Sr. Management in implementation of

Board Philosophy.


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(ix) Formulating the Roles and Responsibilities of Appointed Actuary and

degree of involvement in the product designing , pricing and

determination of liabilities

(x) Reviewing the Reports on integrity and appropriateness of the IT system

of the Company.

(xi)

Forming various Committees of Board for discharging its various dutieswhile retaining its primary accountability.

(xii)Setting up sound system of internal controls and audit including Financial,

operational and Compliance controls and annual review of such system

for their effectiveness.

(xiii)Monitors the financial performance of the Company and must ensure

that the financial results are prepared in accordance with the generally

accepted accounting principles and regulations issued by the Insurance

Regulatory and Development Authority and are reported to shareholders

and regulators on a timely and regular basis.

(xiv)Ensuring that all material developments of the Company are disclosed to

the public on a timely basis in accordance with the Standard Listing

Agreement requirement, when applicable.

(xv)Formulating Compensation strategy and employee benefit schemes.

(xvi)Formulate investment strategies for the investment of the funds.

(xvii)Review the functioning of Whistle Blower Mechanism across the

Company on periodical basis.

(xviii)Take help of independent outside consultants/advisors

(xix) To delegate the powers to committees for ensuring Compliance

II) AUDIT COMMITTEE OF DIRECTORSA) Role

The Company shall set-up an Audit Committee in compliance with the

provisions of Companies Act, 1956 and which binds the constitution and

functioning of the Committee.

The primary function of the Audit Committee shall be to assist the board

in matters relating to applicable legal requirements with respect to

independence, financial literacy, accounting or related financial expertise

etc. The management of the Company has the overall responsibility toprepare financial statements in accordance with generally accepted

accounting principles and any applicable regulations. The Companys

Independent Auditors have the responsibility to audit these financial

statements. The Audit Committees responsibility is one of overseeing the

correct preparation and provision of financial information as well as to

oversee financial reporting, statement of cash flow and disclosure

processes both on an annual and quarterly basis. It shall set-up

procedures and processes to address all concerns relating to adequacy of

checks and control mechanisms. However, the Audit Committee has no

obligation to provide any expert or other special assurance as to theCompanys financial statements.


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B) MembershipThe members of the Audit Committee are appointed by the Board of

Directors. It shall have minimum of three Non-Executive Directors, and

such number of other directors as the Board may determine of whichtwo-thirds of the total number of members shall be directors, other than

managing or whole-time directors.. The Chairman of the Committee shall

be an Independent Director and should ideally be a professional

Chartered Accountant or a person with strong financial background. The

Chairman shall be present at the Annual General Meeting to respond to

shareholder queries. Without prejudice to the powers of Board on

members of Committee or appointment / removal of the members of the

Committee or designating any invitees to the Committee, the CEO /

Managing Directors / Executive Director shall attend the Audit Committee

meeting as an Invitee, for the purpose of providing any information or

any clarification in relation to audit findings.

C) OperationsThe Audit Committee Meeting shall be attended by;

The members of the Audit Committee

Internal Auditors / Statutory auditors

Company Secretary to act as the secretary to the Committee

Such other invitees at the discretion of the Chairman of the

Committee

The meetings of the Audit Committee shall at least be held four times a

year, usually preceding the Board Meeting and not more than four

months shall elapse between two successive meetings. The quorum shall

be either two members or one third of the members of the Committee

whichever is greater, presence of an Independent Director should be

necessary to form a quorum. The quarterly financial statements shall be

reviewed by the Committee before placing the same before the Board. In

addition to its members, the Committee may at its discretion require the

attendance of senior management of the Company at its meetings. The

Committee would be free to meet without the presence of any or all of

such invitees if it so desires. The Company Secretary will maintain

minutes of the meetings of the Audit & Risk Committee. The meetings

can also be conducted vide teleconference / video conference, where

permitted by applicable regulations or as required otherwise.

D) Terms of Reference1.Oversight of the Companys financial reporting process and the

disclosure of its financial information to ensure that the financial

statement is correct, sufficient and credible;


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2.Recommending the appointment and removal of Statutory Auditor /

Internal Auditor / Concurrent Auditor, fixation of audit fee and also

approval for payment for any other services, including review of their

performance and oversight;

3.Reviewing with Management, the annual financial statements before

submission to the Board, focusing primarily on:

a. Any changes in accounting policies and practices,

b. Major accounting entries based on exercise of judgment by

management,

c. Qualifications in draft audit report,

d. Significant adjustments arising out of audit,

e. The going concern assumption,

f. Compliance with accounting standards,

g. Compliance with regulatory authorities and legal requirements

concerning financial statements,

h. Any related party transactions,i. Matters required to be included in the Directors Responsibility

Statement to be included in the Board Report in terms of clause

(2AA) of Section 217 of Companies Act, 1956.

4.Reviewing with the management, Statutory and Internal Auditors,

adequacy of internal control systems;

5.Reviewing the adequacy of internal audit function, including the

structure of the internal audit department, staffing and seniority of

the official heading the department, reporting structure, coverage

and frequency of internal audit;

6.Reviewing and discussing with Internal Auditors / Concurrent Auditorsand management on significant issues/ findings arising from the

internal audit reports / concurrent audit reports and follow up action

thereon;

7.Discussion with Statutory Auditors before the audit commences about

nature and scope of audit. Post-audit, discussion with Statutory

Auditors to ascertain any area of concern;

8.Reviewing the Companys financial policies;

9.Oversee the compliance of internal control systems;

10.To review the Financial statements and draft report, including

quarterly / half-yearly financial information / annual financialstatements before submission to the Board;

11.To have unrestricted access to the Companys books and records;

12.Reviewing the findings of any internal investigations by the Internal

Auditors / External Agencies into matters where there is suspected

fraud or irregularity or a failure of internal control systems of a

material nature and reporting the matter to the Board;

13.Review performance of Internal Audit;

14.Ensure that the Auditors so appointed shall not enter into any other

material contractual relationship with the Company;

15.Ensuring the compliance of the conditions for appointment andeligibility of Statutory Auditors of the Company as stipulated by the

Regulatory Authority from time to time;


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16.Review of performance of the Statutory Auditors;

17.In case of Statutory Audit, the independence of the Statutory Auditors

shall be ensured;

18.To look into the reasons for substantial defaults in the payment to the

depositors, debenture holders, shareholders (in case of non-payment

of declared dividends) and creditors;19.Identifying and reporting of the potential risk factors with necessary

remedial measures, if any;

20.Verification of Assets, Contingent and other disputed liabilities;

21.Overseeing the procedures and processes established to attend to

issues relating to maintenance of books of account, administration

procedures, transactions and other matters having a bearing on the

financial position of the insurer, whether raised by the auditors or by

any other person;

22.Any additional work other than Statutory/Internal Audit that is

entrusted to the auditor or any of its associated persons or companies

shall be specifically approved by the Board / Audit Committee,

keeping in mind the necessity to maintain the independence and

integrity of the audit relationship. All such other work entrusted to

the auditor or its associates shall be specifically disclosed in the Notes

to Accounts forming part of the annual accounts of the insurer;

23.Monitor the progress made in rectification of irregularities and

changes in processes wherever deficiencies have come to the notice;

24.Approval of payment to Statutory Auditors for any other services

rendered by the Statutory Auditors;

25.Approval of appointment of CFO (i.e Whole time Finance Director or

any other person heading the finance function or discharging that

function) after assessing the qualifications, experience and

background, etc of the candidate provided that where the incumbent

is also proposed to be appointed as a Director, such appointment shall

also be placed before the Nomination Committee, to the extent of

Directorship;

26.Approving compliance programmes, reviewing their effectiveness on

a regular basis and signing off on any material compliance issues or

matters;

27.Monitoring the compliance function and the insurers risk profile in

respect of compliance with external laws and regulations and internalpolicies, including the insurers Code of Ethics or Conduct;

28.To investigate any activity within its terms of reference;

29.To have direct access to seek information from any employee of the

Company;

30.To obtain outside legal or other professional advice and to secure

attendance of outsiders with relevant expertise, if it considers

necessary; and

31.Minutes of the meetings of the Audit Committee or similar

Committee, if any, constituted by the Companys subsidiary Company

(Pension Company) shall also be placed before the Committee.


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generally within the ambit of the Terms of Reference mentioned in this

Charter.

The quorum for the meetings of the Committee shall be two Members of

the Committee or one-third of the Members of the Committee,

whichever is higher, including one Independent Director. Resolutions ofthe Committee may also be passed by a resolution by circulation signed

by a majority of the Committee Members, including an Independent

Director.

Minutes of every meeting shall be maintained.

D) Terms of Reference1. To review and discuss with the Management, Companys

Compensation Philosophy and Company's Compensation Discussion

and Analysis (CD&A) including any reports, studies or analysis

provided by external Advisors / Consultants;

2. To determine the Companys policy on specific remuneration

packages and any compensation payment, for the CEO and the Whole

Time Directors of the Company;

3. To decide and finalise terms of remuneration for appointment or

continuation of appointment of whole time directors / Directors

within the limits as may be laid down by the Shareholders of the

Company, either by way of a provision in the Articles of Association of

the Company or vide any resolution passed by them, subject to the

statutory and regulatory approvals, limits and conditions as may be

applicable;

4. To review and approve, on an annual basis, the corporate goals and

objectives with respect to the compensation for the Chief Executive

Officer / Whole Time Director/s. The Committee shall evaluate at least

once a year the Chief Executive Officers / Whole Time Directors

performance in light of the established goals and objectives and based

upon these evaluations, shall set their annual compensation, including

salary, bonus and equity and non-equity incentive compensations.

The compensation structure shall be within the overall limits as laid

down by the shareholders of the Company, and further subject to

statutory and regulatory approvals including that of the Insurance

Regulatory and Development Authority or such other body or

authority as may be applicable;

5. To formulate such policies as may be required, from time to time, for

extending benefits, both monetary and otherwise, to all or any class

of employees of the Company;

6. To formulate one or more scheme(s) for granting of Stock Options to

Employees and Directors of the Company as well as its holding

company / subsidiaries, from time to time, subject to the approval of

the Shareholders of the Company and within the provisions of the

Companies Act, 1956 and other statutes, regulations and guidelines as


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may be applicable from time to time. The Committee shall have full

authority, with power to delegate, with respect to the administration

of such stock option plans; and

7. To oversee the development of Management succession plans for

CXOs including other business critical positions as defined by the

Management.

E) ReportingThe Remuneration Committee shall report to the Board of Directors of

the Company. The Committee shall report its actions and any

recommendations to the Board after each Committee meeting, which will

include through the placing of its signed minutes before the Board of

Directors.

F) SHARE TRANSFER AND ALLOTMENT COMMITTEEA)Role

The Company shall set-up a Share Transfer and Allotment Committee. The

primary function of the Share Transfer and Allotment Committee is to

approve the allotment of shares of the Company and transfer of shares

between the shareholders and to ensure compliance with applicable

provisions.

B)MembershipThe Share Transfer and Allotment Committee shall consist of two or more

Directors. The Company Secretary shall act as Secretary to this Committee.

C)OperationsThe Chairman shall call the Committee meeting as and when required.

Minutes of every meeting will be maintained. The quorum of the meetings

shall be one third of the total strength or two Directors whichever is more.

The meetings can also be conducted vide teleconference/video conference.

D)Terms of Reference1. To appoint/remove Registrars and Share Transfer Agents, Depositories

2. To approve/ratify allotment of shares

3. To approve request lodged with the Company for transfer,

transmission, de-materialisation, re-materialisation of shares

4. To approve/ratify the issuance of duplicate, replaced, split, consolidated

share certificates duly verified, confirmed and recommended by the

Company Secretary, from time to time


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5. Setting up the system for recognizing and rewarding the individuals

adhering to the ethical culture;

6. Reviewing, investigating the instances reported for unethical behavior

of employees or Senior Management Officials and taking suitable

disciplinary action against such employees;

7.

Coordinating activities with the Audit Committee in instances wherethere is any overlap with audit activities;

8. Setting the risk/reward objectives and assess policyholder

expectations;

9. Quantifying the level of risk exposure and assessing the expected

rewards and costs associated with the risk exposure;

10. Formulating and implementing optimal Asset Liability Management

strategies and meeting risk/reward objectives. The strategies must be

laid down both at product level and enterprise level;

11. Laying down the risk tolerance limits;

12. Monitoring risk exposures at periodic intervals and revising ALM

strategies where required;

13. Reporting to the Board on periodical basis;

14. Assist the Board in effective operation of risk management system by

performing specialized analyses and quality reviews;

15. Placing the ALM information before the Board at periodic intervals;

16. Maintaining a group-wide and aggregated view on the risk profile of

the Company in addition to the solo and individual risk profile;

17. Advise the Board with regard to the risk management decisions in

relation to strategic and operational matters such as corporate

strategy, mergers and acquisitions and related matters;

18. Receiving reports on the above and on proactive compliance activities

aimed at increasing the Companys ability to meet its legal and ethical

obligations, on identified weaknesses, lapses, breaches or violations

and the controls and other measures in place to help detect and

address the same;

19. Supervising and monitoring matters reported using the companys

whistle blowing or other confidential mechanisms for employees and

others to report ethical and compliance concerns or potential

breaches or violations;

20. Advising the Board on the effect of the above on the Companys

conduct of business and helping the Board set the correct tone at thetop by communicating, or supporting the communication,

throughout the Company of the importance of ethics and compliance;

21. To consider any matter arising out of the Prevention of Sexual

Harassment Policy; and

22. Minutes of the meetings of the Risk Committee or similar Committee,

if any, constituted by the Companys subsidiary Company (Pension

Company) shall also be placed before the Committee.

E) ReportingThe Risk Management Committee shall report to the Board of Directors of


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the Company. The Committee shall report its actions and any

recommendations to the Board after each Committee meeting which will

include through placing of its minutes of the meetings.

H) INVESTMENT COMMITTEEA) Role

The Investment Committee shall be set-up in compliance with the

provisions of the IRDA (Investment) Regulations, 2000. The primary

function of the Investment Committee is to formulate the investment

policy and strategies for the investment of the policyholder and

shareholder funds in accordance with the limits prescribed in the

regulations.

B) MembershipThe Investment Committee shall consist of a minimum of two non-

executive directors, the Chief Executive Officer, the Principal Officer,

Chiefs of Finance, and Investment divisions, and the Appointed Actuary;

The Company Secretary shall act as Secretary to this Committee.

Composition of the Committee will be as per applicable IRDA Regulations

from time to time. .

C) OperationsThe members of Investment Committee shall meet at least once in a

quarter and not more than four months shall elapse between two

successive meetings. The quorum shall be either two members or one

third of the members of the Committee whichever is greater. The

decisions taken by the Investment Committee shall be properly recorded

and be open to inspection by the officers of the Authority. The meetings

can also be conducted vide teleconference/video conference.

D) Terms of ReferenceI) To consider the following, while framing Investment policy:

a. Liquidity, prudential norms, exposure limits, stop loss limits in

securities trading, management of all investment and market risks,

management of assets-liabilities mismatch, investment audits and

investment statistics, etc. and the provisions of the Insurance Act,

1938 and Insurance Regulatory and Development Authority

(Investment) Regulations, 2000,

b. Adequate returns on Policyholders and Shareholders funds

consistent with the protection, safety and liquidity of such funds,

c. Funds of the insurer shall be invested and continued to be invested

in instruments which enjoy a rating as prescribed from time to timeby regulations, keeping in mind the safety and liquidity of the

policyholders funds are assured.


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J) To recommend any changes in the Company Investment and Lending

Policy for approval by the Board;

K) To note / ratify matters arising out of the Investment Policy;

L) To review Asset Mix of Conventional Product Portfolios;

M)To review Portfolio Yield & Modified Duration in Conventional Portfolio

& Unit-linked Portfolios;N) To review Sectoral Allocation of Equities for Conventional & Unit-linked

Portfolios;

O) To review Fund Performance for Conventional & Unit Linked Funds;

P) In respect of investment in fixed income securities, ensure that

independent credit appraisals have been carried out without

depending solely on external credit agencies;

Q) Put in place an effective reporting system to ensure compliance with

the Policy set out by it, apart from Internal / Concurrent Audit

mechanisms, for a sustained and on-going monitoring of Investment

Operations;

R)Furnish a report to the Board on the performance of Investments

atleast on a quarterly basis and provide analysis of its Investment

portfolio and on the future outlook to enable the Board to look at

possible policy changes and strategies; and

S)To review Rating Exposure of Unit-Linked & Conventional Portfolios.

E) ReportingThe Investment Committee shall report to the Board of Directors of the

Company. The Committee shall report its actions and any



T) POLICYHOLDER PROTECTION COMMITTEEA) Role

Policyholder Protection Committee shall be under the chairmanship of a

Non Executive Director. The primary function of the Committee is to assist

the Board of Directors in putting in place proper procedures and effective

mechanism to address complaints and grievances of policyholders.

B) MembershipThe Policyholder Protection Committee shall consist of two or more Non

Executive Directors. The Company Secretary shall act as Secretary to this

Committee.


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C) OperationsThe members of Policyholder Protection Committee shall meet at least

once in a quarter and not more than four months shall elapse between

two successive meetings. The quorum shall be either two members or onethird of the members of the Committee whichever is greater. Minutes of

every meeting shall be maintained. The quorum of the meetings shall be

one third of the total strength or two Directors whichever is more. The

meetings can also be conducted vide teleconference/video conference.

D) Terms of Reference

1.Putting in place proper procedures and effective mechanism to address

complaints and grievances of policyholders;

2.Ensure compliance with the statutory requirements as laid down in the

regulatory framework;

3.Review of the mechanism at periodic intervals;

4.Review the status of complaints at periodic intervals of the

policyholders;

5.Provide details of insurance ombudsmen to the policyholders;

6.Ensure adequacy of disclosure of material information to the

policyholders. These disclosures shall, for the present, comply with the

requirements laid down by the Authority both at the point of sale and

at periodic intervals;

7.Provide the details of grievances at periodic intervals in such formats as

may be prescribed by the Authority;

8.The Policyholder Protection Committee may invite the external experts

to attend the meetings of the Committee, without the right to vote,

whenever it deems necessary; and

9.To frame policies and procedures to protect the interest of the

Policyholders and for ensuring compliance with the advertisement and

disclosure norms prescribed by the Regulatory Authorities.

E) Reporting

The Policyholder Protection Committee shall report to the Board of

Directors of the Company. The Committee shall report its actions and any



U) NOMINATION COMMITTEE OF DIRECTORSA) Role

Nomination Committee shall comprise of Promoters representation andunder the chairmanship of a Non Executive Director. The primary function

of the Nomination Committee is to assist the Board of Directors in


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exercising the responsibilities and duties set forth in the paragraph on

Terms of Reference

B) MembershipThe Nomination Committee shall consist of two or more Non ExecutiveDirectors. The Company Secretary shall act as Secretary to this

Committee.

C) OperationsThe Chairman shall call the Committee meeting periodically as it may

deem fit, with at least one meeting in a year. Minutes of every meeting

shall be maintained. The quorum of the meetings shall be one third of the

total strength or two Directors whichever is more. The meetings can also

be conducted vide teleconference/video conference.

D) Terms of Reference1. To review the Board structure, size and composition and make any

recommendations to the Board with regard to any changes deemed

necessary;

2. To review and recommend, if appropriate, directors who are retiring

by rotation to be put forward for re-election at the Companys annual

general meeting;

3. To evaluate and review on periodical basis the Fit & Proper criteria

for the Directors and Appointed Actuary as prescribed by the

Regulatory Authority from time to time;

4. To put in place the procedures for appointment of Appointed Actuary

in compliance of conditions prescribed by the Regulatory Authority

for the same;

5. Succession plan for Directors, Senior Management and key position

employees to be adopted, implemented and reviewed from time to

time;

6. Invite any executive of the Company or other external experts to

attend the meetings of the Committee, without the right to vote,

whenever it deems necessary;7. Scrutinize the declarations of intending applicants before the

appointment / re-appointment/ election of Directors by Shareholders

at the general meeting. The Committee could also make independent

/ discreet references, where necessary, well in time to verify the

accuracy of information furnished by the applicant; and

8. To recommend appointment or termination of Managing / Whole

time Directors / Non-Executive Directors, to the Board, subject to

provisions in the Articles of Association, Shareholder resolution, and

statutory and regulatory approvals.


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E) Reporting

The Nomination Committee shall report to the Board of Directors of the


recommendations to the Board after each Committee meeting which willinclude through placing of its minutes of the meetings.

V) EXECUTIVE COMMITTEE OF DIRECTORS

A)RoleAn Executive Committee, having Promoter representation has been set up

to deal with various matters as mentioned below in Terms of Reference,

including urgent matters arising between the board meetings, in those

cases where it is not possible to convene a meeting of the Board.

B)MembershipThe Executive Committee shall consist of two or more Non Executive

Directors under the Chairmanship of Non Executive Director. The Company

Secretary shall act as Secretary to this Committee.

C)Terms of Reference1. To act on behalf of the Board on urgent matters arising between regular

Board meetings in those cases where it is not possible to convene a

meeting of the Board and bring such matters to the immediate

attention of the Board, provided that matters that lie within the remit

of any other existing committee of the Board shall be referred to that

committee;

2. Agreeing and recommending the Companys Business Plan to the Board;

3. Approve long term objectives, including overall business and

commercial strategy, annual operating budgets of the Company, and

the review of these;

4. Matters representing a major change of policy or involvement of a

material nature in a new area of business;5. In relation to any capital or securities issuance, re-organisation,

structuring, and/or re-structuring proposal or transaction, including

through IPO, merger or amalgamation, or in relation to an acquisition

transaction, defining milestones/major activities, and review progress

thereof; appointment of any merchant banker, intermediary,

professional, advisor or any similar person or entity, reviewing terms of

their appointment, or their removal; providing guidance and

consultation including resolving any doubt or question, including on any

back-up plans, etc.;

6. Act on any other matter delegated by the Board


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D)ReportingThe Executive Committee shall report to the Board of Directors of the




Other Committees

The Board shall have powers to form other Committees from time to time and define

their terms of reference


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PART C

I) Responsibilities of the Senior ManagementThe Chief Executive Officer of the company and other key functionaries areresponsible for the operations and day to day management of the company

in line with the directions of the Board and the Committees set up by the

Board. Section 34A of the Insurance Act, 1938 requires prior approval of the

Authority for appointment, re-appointment or termination of the Chief

Executive Officer and the Whole Time Directors. The CEO would be

responsible for the conduct of the companys affair in a manner which is not

detrimental to the interests of the policyholders and is consistent with the

policies and directions of the Board. The Board should, therefore, carry out

effective due diligence to establish that the new incumbent is fit and proper

before recommending the name for Authoritys approval. In case the CEO

resigns, the Authority should be kept informed of such resignation and the

reasons therefore. The Insurance Act also prohibits the CEO of a life

insurance company from being a Director on the Board of any other Indian

insurance company/bank/investment company. As the appointment of the

CEO is made with the prior approval of the IRDA the Board should take

proactive steps to decide on the continuance of CEO well in time before the

expiry of his tenure or to identify the new incumbent. The Authority requires

the proposal to be submitted with the approval of the Board at least a month

before the completion of the tenure of the incumbent.

II) APPOINTED ACTUARYA) Appointment

Appointment of the Appointed Actuary shall be done in accordance

with the procedure set by the Nomination Committee. Nomination

Committee shall ensure the fulfillment of Fit & Proper criteria of

Appointed Actuary at the time of appointment and shall review after

that on time to time.

B) Role1. The Appointed Actuary is responsible for reviewing and

approving internal standards for actuarial processes. Controls and

documentation as well as for assumptions, methods and models,

in accordance with all applicable laws and regulations,

2. The Appointed Actuary is responsible for a report on actuarial

processes and results to the Board of Directors and to Senior

Management of the Company, to assist in understanding

principle base reserve results and significant and unusual issues

and findings.

3. The Appointed Actuary shall provide a certificate on adequacy on


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solvency margin

C) Powers1. An Appointed Actuary shall have access to all information or

documents in possession, or under control, of the Company forthe proper and effective performance of the functions and

duties of the appointed actuary.

2. The Appointed Actuary may seek any information from any

officer or employee of the Company.

3. The Appointed Actuary shall attend all meetings of the

management including the directors of the Company as well as

Shareholders, policyholders.

D) Duties and obligations.1. Rendering actuarial advice to the management, in particular in

the areas of product design and pricing, insurance contract

wording, investments and reinsurance;

2. Ensuring the solvency of the insurer at all times;

3. Complying with the duties prescribed by the Regulatory

Authority from time to time.

4. Reporting to the Board in case of any irregularity, non

compliance or adversity is noticed for the corrective action.

III)TRANSPARENCY AND DISCLOSURES AT HDFCSLThere are several systems and procedures to disseminate relevant

information to the stakeholders, including shareholders, analysts, suppliers,

customers, employees and the society at large. The primary source of

information is our corporate website www.hdfclife.com. All official news

releases and presentations made to investors and analysts are posted on thewebsite.

In addition, we also maintain other electronic platforms through which we

interface with customers, suppliers, field and non-field employees.

IV)DISCLOSURESA) External Disclosures:

i) Legal CompliancesThe Company shall follow a formal management policy and system of


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legal compliance and reporting to facilitate periodical review by the

Audit Committee of compliance status of laws applicable to the

Company and steps taken to rectify non-compliances, if any.

ii)Conflict of Interest & Related Party TransactionsThe Board of Directors have adopted the Conflict of Interest Policy

and it is Communicated and being implemented across the

Organization. The Board of Directors have Authorized the Audit

Committee to review the key transactions and Disclosures received

under the Policy on periodical basis.

Transactions with related parties shall be annexed to the financial

statements for the year. Adequate care shall be taken to ensure that

the potential conflicts of interest do not harm the interests of the

Company at large.

The Shares and Convertible debentures of the Company held by the

all the Directors shall be disclosed in the Annual Report of the

Company.

iii)Disclosures in the Annual report:The Company should disclose the following in its annual report:

(i) Number of meetings held of the Board of Directors and the

Committees mandated under the guidelines, in the Financial year

(ii) Details of the Composition of the Board of Directors and the

Committees mandated, setting out name, qualification, field of

specialization, status of Directorship held etc.

(iii) Number of meetings attended by the Directors and the members

of the Committee

(iv) Details of the remuneration paid, if any to the Independent

Director

(v) Annual report to have certification from the Compliance Officer.

B) Internal Disclosures:i) Process Compliance at HDFCSL

Business Process Management as a proactive activity shall be ideally

performed in near real time whereby process design, implementation,

measurement and review of business activities are co-centric to the

process life cycle management framework.

Compliance risk management shall be an integral component of

Business Process Management. Its goals shall be to minimize theeffects of violation of or non-conformance with many rules that

govern how financial services business activities are supposed to


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conduct business.

ii)Employee Dealing PolicyThe Company has established policies and procedures for the conduct

of employee dealing. Members of the Investment Committee, seniorManagement as well as employees in the Investment Department are

expected to abide with this Policy.

iii) Code of Conduct of Directors & EmployeesThe Code of Conduct adopted by the Company shall be posted on the

web site of the Company. The members of the Board and senior

management of the Company shall submit their affirmation on

compliance with the Code of Conduct for the effective period. The

declaration by the Whole Time Directors to that effect shall form part

of the annual report.

iv) Outsourcing PolicyCompany shall lay down the Outsourcing Policy in accordance with

the guidelines issued by the IRDA from time to time. Outsourcing

involves transferring responsibility for carrying out an activity

(previously carried on internally) to an outsourcer for an agreed

charge. The outsourcer provides services to the customer based on a

mutually agreed service level, normally defined in a formal contract.

All the Outsourcings shall be carried out according to the Policy

adopted by the Company.

v) Whistle Blower PolicyThe Whistle Blower Policy of the Company shall be drawn to achieve

the highest business and personal, ethical and legal standards.

Whistle Blower means the employee of HDFCSL making a protected

disclosure under this policy. He/She is neither an investigator nor a

finder of facts, nor does he/she determine the appropriate correctiveor remedial action that may be warranted. Issues raised to the

Whistleblower Committee constituted under the Policy shall be kept

in utmost confidence and shall be investigated in a fair manner.

The functioning of Whistle blower mechanism shall be reviewed by

Board of Directors once in two years or in between should there be a

change/amendment in regulations Malpractice Matrix Policy

The Company shall lay down the Malpractice Matrix policy in an

endeavor to become the most trusted Company. Malpractice refersto misconduct or breach of duty in the performance of a professional

service those results in a financial and reputation loss. All the


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employees in the company are expected to abide with this Policy.

vi) Risk Management PolicyThe Company shall lay down a Risk Management Policy which will

envisage within its scope an enterprise wide risk managementframework covering inter-alia the following:

Physical Security

Technology Security

Information Security

Third Party Security

Change Management

Operational Risks

vii) Anti Money Laundering PolicyThe Anti Money Laundering Policy of the Company shall be in

conformity with the guidelines laid down by law from time to time.

The Anti Money Laundering Policy adopted by the Company is posted

on the website of the Company. Money Laundering is moving

illegally acquired cash through financial systems so that it appears to

be legally acquired. As a measure, the Company shall adhere to the

Know Your Customer (KYC) Norms and the guidelines issued by the

regulators from time to time.

viii)Apex Code of Best Practice for Indian Life InsuranceThe Companys Insurance Business is based on the twin principles of

trust and risk- sharing. It is very important that such a business is

operated and administered with the highest degree of integrity and

ethics. For a desirable framework the Company has adopted Apex

Code of Best Practice for Indian Life Insurance.


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ix) Reporting to IRDACompany secretary is designated as Compliance Officer whose duty

shall be to monitor continuing compliance with these guidelines.

Corporate Governance Policy will be reviewed once in two years, or in

between should there be a change/amendment in regulations.

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hdfclife cg policy

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